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Sweden to pause inflation-linked hike in state taxes in budget

A view of the Swedish Parliament House in Stockholm

STOCKHOLM (Reuters) - Sweden's government will pause an automatic hike in the threshold for paying state taxes this year, Finance Minister Elisabeth Svantesson told the Dagens Nyheter, saving around 12 billion Swedish crowns ($1.1 billion).

The threshold for paying an additional state income tax over and above local taxes is usually raised in line with inflation and mainly benefits the wealthy.

But with prices having soared over the last year, the right-of-centre government will pause this year's increase, the daily Dagens Nyheter reported.

"We need to fight inflation, we need a restrained budget," Dagens Nyheter quoted Svantesson as saying.

State income tax of 20% kicks in on income above a threshold of around 51,000 crowns a month.

The re-rating of state income tax is usually part of the autumn budget, which will be published on Sept. 20.

(This story has been refiled to correct the spelling of 'Sweden' in the headline)

($1 = 11.0315 Swedish crowns)

(Reporting by Simon Johnson; Editing by Hugh Lawson)